Britam has embarked on a diversification project that will see it lower its investment in the money markets and raise real estate to between 20 and 30 per cent of its asset mix from the current 16 per cent.
Planned investments will push the company’s real estate portfolio to between Sh25-35 billion in the next decade include a Sh12 billion mall to be constructed in Kileleshwa, a 50,000 square-metre logistic park near Mlolongo and on-going construction of serviced apartments in Kilimani, Nairobi.
Britam’s Group Managing Director Benson Wairegi told journalists during an interview after the firm’s AGM two weeks ago that they would pursue property development and management as its core business after creating a separate business unit known as Britam Properties (Kenya) Limited.
“Real estate has always been a good area to invest because property, especially in prime areas where we are targeting to establish these buildings, always appreciate. We want to do a mall because there is pent up demand in Kileleshwa and there are no malls in that proximity,” said Mr Wairegi.
“It will be a mall of mixed development that includes offices, serviced apartments and a hotel. The project value is approximately Sh12 billion, including land.”
Britam, which has insurance, asset management and property development businesses, has acquired land worth Sh10 billion and is among key corporate investors looking for alternative investment platforms outside the stock market.
Mr Wairegi said they have started leasing space at the 32-storey Britam Towers, which will be the third-tallest building in Africa at 195 metres above the ground.
Besides the planned investments, the company is also working on serviced apartments in Kilimani and Hurlingham, Mlolongo residential and Ngong Township mixed-use developments. It recently received Sh3.5 billion from the International Finance Corporation for a 10.3 per cent stake.
Britam is positioning itself to benefit from an emerging trend where investors are running away from Treasury bonds to fixed asset class whose capital appreciation has averaged 24.3 per cent in the last five years, in areas zoned for commercial use such as Kilimani, Upper Hill and Westlands.
Generally, serviced apartments are fast becoming a hot real estate avenue, with better annual yield on investments.
Experts say in the serviced apartments space, developers, primarily from the hospitality sector, are targeting non-resident Kenyans, expatriates and even domestic investors. To investors, this segment offers both capital value appreciation as well as rental returns.
Real estate has become one of the fastest-growing sectors over the last decade, fuelled by a burgeoning middle class.
Returns on investment have outpaced those of equities and Government securities. Shopping malls have sprung up across Nairobi as retailers seek to tap into a growing middle class with disposable incomes and a limited choice of leisure activities.